Global financial markets displayed measured resilience Monday as traders navigated escalating Middle East tensions and positioned for this week's Federal Reserve policy meeting, with equity futures rising despite oil prices surging to multi-month highs amid the Israel-Iran conflict.
US index futures showed strength on June 16, with Dow Jones, S&P 500, and Nasdaq futures all posting gains even as the four-day-old conflict continues to unfold. The response suggests investors are pricing the military exchanges as a contained regional dispute rather than a broader war that could destabilize global markets.
Crude oil markets bore the brunt of geopolitical anxiety, with Brent futures climbing near $74 per barrel after surging over 7% in recent sessions12. West Texas Intermediate jumped 10% last week as Iran launched over 150 ballistic missiles and more than 100 drones against Israeli targets on June 13, retaliating for Israeli strikes on Iranian nuclear facilities earlier that day345.
"If you look at the Israeli bombing, they have done on fuel depots and the big refineries in Iran have not been struck," veteran money manager Ajay Bagga told Moneycontrol1. "So, they are making sure that Iranian exports continue, they are not debilitating that."
Gold prices climbed above $3,400 per ounce, approaching record territory as investors sought safe-haven assets12. The dollar hit 2025 lows while European equities declined over 1%26.
The Federal Reserve faces its June 19 policy meeting with markets pricing a 99.6% probability that officials will hold interest rates steady at the current 4.25%-4.5% range1. Bond futures traders see 60% odds that the next rate cut comes in September2.
Fed Chair Jerome Powell has indicated preference for maintaining current rates as officials weigh solid economic data against potential future risks from tariff policies and other uncertainties2. The central bank's updated economic projections, released after the meeting, could show fewer anticipated rate cuts for 20252.
The conflict marked the largest attack on Iran since the Iran-Iraq War of the 1980s, with Israel's "Operation Rising Lion" targeting nuclear sites and military installations1. Iran's retaliatory "Operation True Promise III" represented a direct military confrontation between the longtime adversaries2.
Despite the escalation, analysts noted the absence of panic in equity markets. "Markets will be severely impacted only if Iran closes the Strait of Hormuz triggering a huge spike in crude," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited3. "This appears to be a low probability event now."
